As inflation pressures persist and household budgets tighten, two of the largest for-profit health systems are offering contrasting views on the role of consumer confidence in shaping patient behavior — particularly when it comes to surgical procedures and care with high out-of-pocket costs.
During recent second-quarter earnings calls, executives from HCA Healthcare and Community Health Systems discussed how demand for care is evolving and whether patient volume shifts are being influenced more by financial sentiment or structural changes in care delivery.
HCA: Demand remains resilient, consumer confidence not a major factor
HCA Healthcare, headquartered in Nashville, Tenn., reported inpatient and emergency room volumes largely in line with expectations. CFO Mike Marks noted a 4% year-over-year increase in equivalent admissions through June, with particularly strong growth in exchange-based plans — up 15.8% year to date.
“Healthcare exchanges … are a little better than our original expectation and our commercial managed care book, excluding the exchanges, is up just short of a point to prior year,” Mr. Marks said during the company’s second-quarter earnings call on July 25.
While some payer categories, such as commercial managed care, came in slightly below expectations, HCA CEO Sam Hazen emphasized that overall demand remained steady.
“The demand for healthcare, largely over time, appears to have been inelastic,” Mr. Hazen said. “I don’t know that anything is necessarily changing that, so it’s difficult for us to point to consumer confidence — at least across our portfolio — as a driver of activity.”
HCA saw declines in certain service lines — including pediatrics and behavioral health — but executives attributed those shifts more to seasonal variation and strategic supply reductions than to economic pressures.
CHS: Consumer confidence is impacting volume, especially surgeries
Franklin, Tenn.-based CHS told a different story. Same-store net revenue increased 6.5% year over year in the second quarter, but patient volumes fell short of expectations — particularly for surgeries, driven heavily by orthopedics. Emergency room visits also declined 1.9%.
“Most of the declines were primarily commercial Blue Cross business, so that’s where we’re seeing the biggest headwinds,” CHS President and CFO Kevin Hammons said during the company’s second-quarter earnings call on July 25. “[It] certainly impacted our net revenue per adjusted admission [and] the flow-through to EBITDA.
Mr. Hammons said these trends support CHS’ view that declining consumer confidence and household financial pressures are key factors behind the slowdown in surgical and overall care utilization.
“It’s those patients who have the highest co-pays and deductibles that are being most impacted,” he said. “And I think even if you look at some other industries across the country where we’re seeing consumers not spending money, their discretionary income on things.”
Mr. Hammons pointed to a sharp decline in consumer confidence over the second quarter — reaching lows not seen since the early days of the COVID-19 pandemic. Patients with the highest deductibles and co-pays, particularly in exchange plans, appear to be deferring procedures, according to CHS.
CHS has not seen much change in its Medicare book of business, which has the lowest deducible component.
“That is the group of patients least impacted by some of this consumer confidence issue, [which] … further supports our belief that what’s driving some of the patient behavior is around financial decisions,” he said. “So those patients are government-insured patients that don’t have high co-pays and deductibles, [and] haven’t really changed their behavior in terms of coming to receive healthcare.”
He added that exchange-based business was up overall, but showed reduced acuity, particularly in surgeries — again reflecting consumer cost concerns.
“Overall volume of exchange business was up, but acuity of exchange business was severely down with the biggest component of that being surgeries,” he said. “So there, again, led us to the same conclusion because most of the exchange contracts have some higher co-pays and deductibles.”
Despite these trends, CEO Tim Hingtgen said CHS is well positioned for a rebound.
“While patient volumes were lower than expected and hampered our overall earnings results, we are confident that our past development in capital investment strategies have positioned CHS very well to capture patient demand once consumer confidence returns, and it always has,” Mr. Hingtgen said. “Our development strategies include physical capacity and service line expansions with a balanced focus on both inpatient and outpatient care. And we are intentional about broadening the footprint of our health systems through the ongoing recruitment of primary care, specialty physicians and other providers.”
Two systems, two readings of consumer confidence
While both systems are watching payer mix and surgical trends closely, their interpretation of consumer confidence diverges.
HCA views volume trends as stable and largely insulated from economic sentiment, suggesting that healthcare demand, even in commercial categories, remains consistent over time. CHS attributes slower surgical recovery and earnings pressure in part to a downturn in consumer confidence, especially among patients with higher cost-sharing responsibilities.
Both health systems, however, share confidence in one trend: demand will return, and readiness will determine who captures it.
